| CAPITALIZATION |
| Capitalization is the process
of converting a series of anticipated future payments (income) into present value.
Capitalization transforms net operating income produced by a property into the property
value.
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| CAPITALIZATION RATE |
| A composite rate used
for converting property income into property value.
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| CENTRAL TENDENCY |
| (1) The tendency
of most kinds of data to cluster around some typical or central value, such as the
mean, median, or mode. (2) By extension, any or all such statistics. Some
kinds of data, however, such as the weights of cars and trucks, may cluster about
two or more values, and in such circumstances, the meaning of central tendency becomes
unclear. This may happen in ratio studies when two or more classes of property
are combined.
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| COLLECTION LOSS |
| The loss resulting from
the failure of tenants to pay the rent.
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| COEFFICIENT OF DISPERSION |
| The average
deviation of a group of numbers from the median expressed as a percentage of the
median. In ratio studies, the average percentage deviation from the median ratio.
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| COEFFICIENT OF VARIATION (COV) |
| A
standard statistical measure of the relative dispersion of the sample data about
the mean of the data; the standard deviation expressed as a percentage of the mean.
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| COST APPROACH |
| One of the three approaches to value,
the cost approach is based on the principle of substitution – that a rational, informed
purchaser would pay no more for a property than the cost of building an acceptable
substitute with utility. The cost approach seeks to determine the replacement
cost new of an improvement less depreciation plus land value.
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